Interest from Savings Accounts

I'm a little confused as how to categorize savings account interest. Should this be a) Income to be Budgeted or b) Financial:Interest? Thanks.

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  • Inflow: To Be Budgeted

    All money coming into your budget should go to that category unless it's a refund or reimbursement.

    Like 5
    • nolesrule Thanks. But why then are there interest categories ?

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 2 yrs ago
      • 3
      • Reported - view

      Purple Hammerhead Budget categories are for spending (or for savings... aka deferred spending). That one could be used for some sort of interest charge, such as a credit card finance charge.

      By the way, you don't have to use any of the default spending categories that come with a new YNAB budget. You can customize as much as you want to align with your own priorities and spending/savings.

      Like 3
  • Hi Purple Hammerhead !

    Nolesrule is exactly right! You want to categorize that interest as Inflow: To Be Budgeted. I use an "Interest" payee to keep track of exactly how much I receive in interest.

    Also, here's an article on how that Interest & Fees category is intended to be used:

    docs.youneedabudget.com/article/140-credit-card-interest

    If you still have questions, please don't hesitate to ask! :)

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  • Hi - I know this is an old thread, but I just wanted to ask a question about this.  I entered my interest as you suggested, using Interest as the payee, but it is telling me that I need to enter a category.   I can see that this is going to be distracting because my eyes will keep coming back to this.  Is there a way of satisfying this so that that message goes away?   See image

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      • Superbone
      • YNAB convert since 2008
      • Superbone
      • 10 days ago
      • 4
      • Reported - view

      Khaki Network Yes, give it a category. 🙂 I suggest Inflow: To Be Budgeted. Your eyes are drawn to it by design so you'll fix it.

      Like 4
  • Superbone said:
    Yes, give it a category. 🙂 I suggest Inflow: To Be Budgeted.

     I know that is the standard, and appropriate place for it to go, but I, at some point decided that (in addition to my normal monthly budget amount) I would add all my interest income into my Christmas category.  So I actually just put it directly in there, instead of putting it into TBB and then possibly forgetting that I intended for it to move into Christmas spending.

    I'm not saying follow my lead.  I'm simply saying it works for me.  And I don't really use the reports, so I don't really care if it messes up the reports.  I wouldn't notice anyway.  Just a little tweak I have for making it slightly easier to fill my Christmas category.  YMMV.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 10 days ago
      • 2
      • Reported - view

      Bruce 

      Bruce said:
      income into my Christmas category. 

       This skews your reporting, because it hides how much you actually spend on Christmas.

      Like 2
      • Bruce
      • Software Engineer
      • Bruce
      • 10 days ago
      • Reported - view

      nolesrule Yes, I've heard that argument, but you know how many times I've used the reports?  maybe twice, just to see what they looked like.  And another time or two when I was trying to hit "All Accounts" tab and actually hit "Reports".  So for me, that makes no difference.

      However, I realize you have to say that, so other people, who may actually care about the reports will know not to follow my example.

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      • nolesrule
      • YNAB4 Evangelist
      • nolesrule
      • 10 days ago
      • Reported - view

      Bruce It also skews your averages calculated on the budget screen even if you don't look at reports. So when deciding how much to budget in the future based on the averages, your average spent will be lower than what you actually spent.

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      • Bruce
      • Software Engineer
      • Bruce
      • 10 days ago
      • Reported - view

      nolesrule  I can live with that.  This is the only category I do this with, and I have a specific amount per month that I budget to the category in addition to this abnormal, divergent abuse of my budget.  I don't use averages for this category.  

      Anyway, I suppose I could put it into TBB and then directly into Christmas.  But Still...  shrug.  Thanks for trying to rescue me from myself.  I'll see how I feel when I get my next interest income.

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      • HappyDance
      • YNABing consistently since 2014
      • HappyDance
      • 10 days ago
      • 2
      • Reported - view

      Bruce 

      Are you kidding us?  No, really, are you kidding us? 🙂 (Not asked disrespectfully, but in frank and sincere surprise.) 

      One of my biggest joys with YNAB has been looking at the reports and seeing the steady growth, year over year, and one of those growth markers has been my annual interest income.

      In 2019  I felt so accomplished when it added up to a 4-digit number. That's a number with a comma in it, a long, long way from my first year with it's piddling $2.85 interest earned for the entire year.  I even got a T5 tax form from my bank that had to be filed with the Canadian tax man because I crossed a reporting requirement threshold in 2019.  I know that I'm in a rare group of people, feeling smug about having to report interest income and pay taxes on it. Truly, it's one of very few pleasures I've ever had as a result of taxation.

      Now, granted, inflowing direct to category wouldn't change anything. I'd likely still have the same bank balance. I know I would have paid the same in taxes; that's unavoidable. I guess I can see why you wouldn't bother using the reports; there's nothing particularly useful (or wonderful) in them.

      Like 2
  • HappyDance said:
    Are you kidding us?  No, really, are you kidding us? 🙂 (Not asked disrespectfully, but in frank and sincere surprise.) 

    lol...  Ok, you've inspired me to at least take a look at the reports and see what I'm  missing.  They are colorful and somewhat fun to dig down through the categories, I guess...  and seeing net worth over time is good I guess...  I may spend some time trying to understand them, but at first glance, I haven't found a ton of value in them...  We'll see.

    Like 1
    • Bruce There are certainly things I can think of to make them more useful (show hidden categories, rearrange category groups to compare for just the reports, drill down into categories in multiple groups and "all other categories," showing graphs of budgeted and available amounts, and making it easier to change the date range, to name a few - all of which I've requested at least once). But Net Worth has always been nice to watch, the spending trends/proportions are moderately interesting, Toolkit's balance over time is interesting, and the Income vs. Expense report has given me good information that was a bit unwieldy to get in All Accounts (like real data for split transactions).

      Like any statistic, take them with a grain of salt. They're moderately interesting, but maybe not earth-shattering.

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  • Bruce said:
    I suppose I could put it into TBB and then directly into Christmas

    As a True Expense, I'd expect that you already have a target amount in mind to spend for Christmas.

    Since interest varies, I target an amount that will consistently be there as part of my nominal plan (or template or goals if you use them). I always put anything over that amount toward whatever top-priority category I'd like to accelerate or increase. If you want that to be Christmas, that's your call.

    It sure would be nice if there was a keyboard shortcut / Quick-Budget button to put the contents of TBB into the selected category (or distribute them even across multiple selected categories).

    Like 1
  • dakinemaui said:
    As a True Expense, I'd expect that you already have a target amount in mind to spend for Christmas.
    Since interest varies, I target an amount that will consistently be there as part of my nominal plan

     Yes, I do.  A certain amount each month, and then at some point I decided I'd add interest income into it as well.  Yeah, I see what you're saying, in this case, I've kinda said "when it comes to interest expense, Christmas is my highest priority."  It just makes it easier for me.

    But I can see what you're saying, and any other time any other source of extra income comes my way (bonus, windfall, 3rd paycheck of the month etc.) I am more discerning about priorities, and Christmas usually loses out at that time.  It's just a quick shortcut that makes me have to think less, and one more step towards automating the budget.

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  • Hi All - I decided to give interest earned a job of going towards Emergency Expenses - at least for now.  Thanks for your feedback.

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